Microsoft launches voluntary departure program for about 60,000 employees, the third round of staffing adjustments this year

On the 26th, US tech giant Microsoft launched a voluntary separation program, offering about 60,000 eligible employees the option to leave with compensation, roughly equivalent to 27% of Microsoft's total global workforce. As of the end of June this year, Microsoft had about 223,000 full-time employees. This is another similar program Microsoft has launched after April this year, and the scale of those involved far exceeds the previous one. Analysts believe the new plan aims to control costs and "pump blood" into its hundreds of billions of dollars in AI investment. Reportedly covers vice president level Amy Coleman, Microsoft executive vice president and chief people officer, said in a memo sent to employees on Monday that the offer provides eligible employees with a new option to consider leaving the company to develop elsewhere, with corresponding support. The plan applies to eligible employees at level 70 and below in participating departments in the United States, Canada, India and the United Kingdom, including senior executives. The sales department, some engineering teams and some corporate functions are not within the scope of this plan. Eligible employees need to decide whether to accept the offer by early December and leave the company by the end of this year. The compensation terms of the voluntary separation program will be similar to the company's standard layoff compensation plan. The package Microsoft offered during layoffs in the United States earlier this year included at least 60 days of base pay, and for most employees the company also offered up to 39 weeks of base pay based on level and tenure. According to people familiar with the matter, the voluntary separation program in April this year was only open to employees at the senior director level and below (that is, below level 67). By comparison, the new plan has a broader scope and covers the vice president level. Microsoft has not set a specific target number this time. The person familiar with the matter also said that more than 30% of employees accepted the April voluntary separation program. But Microsoft expects the proportion of employees accepting the latest separation compensation plan to be far lower than that level. AI investment squeezes budget This is already Microsoft's third round of personnel adjustments this year. After Microsoft announced its first voluntary separation program for about 8,750 US employees in April this year, it laid off 4,800 people in July, with Xbox's gaming business hit hardest. Behind Microsoft's continued "slimming down" is the squeeze AI investment places on budgets. Around 2022, Microsoft began large-scale investment in AI and data centers, and budgets and hiring in other departments tightened accordingly. In July this year, Microsoft said capital expenditure for the quarter ending in September was expected to exceed $50 billion. In the same period last year, its total capital expenditure and finance leases were $34.9 billion. The company is expected to release its new quarterly earnings report after the stock market closes on Wednesday, and full-year capital expenditure for 2026 is forecast to reach $175 billion. Investors will closely watch whether the huge AI investment can begin to deliver returns. Microsoft is not the only company freeing up resources for AI. This year, several tech companies have announced layoffs due to the rise of artificial intelligence and increased investment in the technology. Meta announced in April that it planned to cut 10% of its workforce, or about 8,000 employees, to improve efficiency. Amazon has repeatedly cut its workforce, most recently in its retail division. And in June, Oracle reduced its workforce by nearly 13%, cutting 21,000 jobs. On the financial side, in the second quarter, Microsoft's cloud computing rivals Alphabet and Amazon both reported negative free cash flow, while Microsoft's free cash flow in the same period was $19.64 billion, down 23% year on year. Observers believe Microsoft is in a period of business model transformation, trying to charge based on the extent to which customers actually use artificial intelligence. Its goal is to complete the transformation without weakening its financial position. The new "slimming down" plan does not mean Microsoft has fallen into a financial crisis. More accurately, the time gap between the costs and returns of AI investment is becoming an operational issue that tech giants must manage. Some commentary pointed out that perhaps tech giants are all doing the same arithmetic problem: use fewer people to feed bigger models. (Editor's email: ylq@jfdaily.com)